J&J Looks to Pare Agencies, Costs in Review Driven by Speed and Effectiveness

Top Marketer Says Recall, Production Woes 'Not a Factor at All'

Johnson & Johnson expects to decide by October how to consolidate the global roster for its consumer-products business in a process top marketer Michael Sneed said may eliminate agencies but isn't primarily driven by cost or by accounts that have shrunk due to recall and manufacturing issues.

In an interview with Advertising Age, Mr. Sneed, who took over earlier this year as VP-global corporate affairs, said the review includes only current roster shops.

J&J spent $2.6 billion globally on advertising last year, mainly on its consumer businesses, and $1.94 billion in the U.S., according to the Ad Age DataCenter, with the consumer businesses making up the vast majority of that spending.

"Our consumer business is quite broad and frankly very complex," Mr. Sneed said, adding that meetings internally and with "external partners" identified a need to simplify the roster.

J&J several years ago moved to put its consumer accounts primarily with three holding companies -- WPP, Omnicom and Interpublic -- Mr. Sneed noted. Publicis Groupe 's Razorfish is also J&J's search agency of record and handles some digital work outside the U.S., said Kim Kadlec, worldwide VP-marketing, but that piece of the J&J business is not subject to the review at this point.

"The relationships with the holding companies remain quite strong and we remain very pleased with the agencies within those holding companies," Mr. Sneed said. "We will be moving brands among agencies. We will be eliminating some agencies from our roster in the short-term, but it's not based on performance. I would fully expect that as we look at new businesses, new opportunities that those agencies will continue to be in play, continue to be candidates going forward."

Cost is a factor, but not the driving one, Mr. Sneed said. "We will generate cost savings as a result of this, but it's really about how do we do things quicker, how do we make better and faster decisions," he said.

J&J, though already familiar with all the agencies, "may have some additional conversations with them just so we understand the scope of their work and capabilities," Mr. Sneed said. He's already discussed with agencies "possibilities and scenarios and what opportunities might exist to put certain brands with certain agencies" but told them, "they don't have to look at this as a pitch process or invest large sums of money."

Recalls and resulting product-supply issues have lingered now for nearly three years and aren't expected to be fully resolved until the back half of next year, rendering some accounts, particularly Tylenol, much smaller than they were years ago. But that 's "not a factor at all," in consolidating the roster, Mr. Sneed said.

"We have every confidence that when we get our products back on the shelf, we will support them at levels commensurate if not higher than before, and frankly we need to do that ," Mr. Sneed said. "We've been off the shelf quite a while."

J&J is "very pleased" with the multidisciplinary WPP "Team Chemistry" unit put together in 2008 to serve its pharmaceutical business, Mr. Sneed said. But that business and medical devices aren't part of this review, and Mr. Sneed said creating such a team approach on the consumer business "is not the intention right now."